Question-and-Answer Session
Operator
(Operator Instructions)Your first question comes from Kevin Campbell - Avondale Partners.
Kevin Campbell - Avondale Partners
I have a couple of questions here on the facility in Colorado. Could you talk a little bit about your exposure from a lease payment, if the facility doesn’t ramp on time? So we saw obviously this quarter both Corrections Corp. and GEO lowered their outlooks here for the back half of this year. Would you guys be required to start making lease payments in the fourth quarter of 2009? And if there is some delay in ramp there, what would you be on the hook for?
James E. Hyman
Yes, we are required to make lease payments. We have structured the arrangement and we’ve been talking to the customer about their needs, we feel that we have that sort of ramp risk accommodated.
I will make a comment on that. You probably remember a year ago when we were probably a little over aggressive in our ramp assumptions at Great Plains in September of last year and on the second quarter conference call for 2007 we had to announce that that was delayed. I think that experience for us was chastening and as a result, when we think about ramp at all of our facilities, we do try to take into account some of the uncertainties from the customer side.
So we have a schedule for Hudson that takes into account the vagaries of weather and construction, actually at the site and we have been talking with the customer directly about their needs and when they need those beds. So we feel that we’ve got a prudent structure there. But sure, if they got pushed way back, that would have an impact.
Kevin Campbell - Avondale Partners
Could you give us an idea what the quarterly, or annual, lease payment is?
James E. Hyman
Not right now, Kevin.
Kevin Campbell - Avondale Partners
And it seems like in Colorado, I guess given Corrections Corp. has some expansion beds coming on line there, is that something you’ve taken into account as well? I think they had two that opened up this quarter. Is that something you’ve considered as well?
James E. Hyman
The answer is yes. And let me make a comment of how we think about expansion and capacity and when we decide to bring on stream. And I think we’ve talked about it on prior calls, maybe not explicitly. But when we think about committing capital, or making a commitment of the corporation, whether it’s our capital or in this case eventually it’s Inland and our lease obligations through them, clearly what we’re looking for is the commitment from the customer. And whether that be with certain states, say contract, with other states an implementation agreement, it depends on the structure of how those states or the federal customer can operate, it’s nice to have that piece of paper.
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